Pub & Restaurant Stamp Duty
How stamp duty applies to buying a pub, bar, restaurant, or food and beverage premises. Covers non-residential SDLT rates, going concern transfers, goodwill allocation rules, chattel exclusions, and leasehold pub purchases.
In this article
Key Takeaways
- Pubs and restaurants pay non-residential SDLT: 0% (up to £150k), 2% (£150k-£250k), 5% (above £250k)
- Going concern transfers allow apportionment: only the property element is subject to SDLT
- Goodwill, stock, and movable chattels can be excluded from SDLT — but allocations must reflect genuine market value
- HMRC scrutinizes excessive goodwill allocations; location-based goodwill may be treated as part of the property (HMRC v Denning)
- Movable pub fixtures (furniture, kitchen equipment, bar pumps) are chattels excluded from SDLT
- No additional property surcharge on commercial pub/restaurant purchases
- Leasehold pubs: SDLT also due on NPV of rent (0% to £150k, 1% to £5m, 2% above)
Non-Residential SDLT Rates
Pubs, restaurants, bars, and cafes are classified as non-residential property for stamp duty land tax. This means they pay lower rate bands than residential property — with a maximum rate of 5% rather than the 12% that can apply to residential homes. Use our stamp duty calculator to estimate SDLT on your pub or restaurant purchase, or read the full commercial property SDLT guide.
| Purchase Price Band | SDLT Rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Above £250,000 | 5% |
No additional property surcharge
The 5% additional property surcharge does not apply to commercial property. Whether you own one property or a portfolio, buying a pub or restaurant attracts no surcharge. This is one of the key advantages of commercial property investment over residential.
Going Concern Transfers
When a pub or restaurant is sold as a trading business rather than as an empty property, the purchase is a going concern transfer. In this scenario, the total consideration covers multiple elements — the property itself, the business goodwill, trade equipment, stock, and intellectual property such as recipes or brand licences.
SDLT is charged only on the property element of a going concern transfer. The other elements — goodwill, movable chattels, stock, licences — are excluded from the SDLT calculation. This apportionment is one of the most important SDLT planning opportunities in hospitality property transactions.
What a going concern transfer looks like
A typical pub purchase might apportion:
- • Property (land & building): £350,000 — subject to SDLT
- • Business goodwill: £80,000 — potentially exempt
- • Trade fixtures & fittings: £40,000 — exempt if movable
- • Stock: £15,000 — exempt
- • Total: £485,000
The apportionment must be commercially realistic. HMRC will compare the property element to local comparable sales and challenge allocations where the property proportion appears artificially low. A licensed property valuation from a specialist valuer provides the best protection.
Goodwill Allocation and HMRC Scrutiny
Goodwill in a pub or restaurant business encompasses the value of the trading reputation, customer base, brand, and operational systems. For SDLT purposes, goodwill can be excluded — but the allocation is subject to significant HMRC scrutiny.
HMRC v Denning: the location goodwill problem
The Denning case established that goodwill tied to the location of the business (rather than its owner) is difficult to separate from the land value for SDLT. In hospitality, this is particularly acute:
- • A pub on a busy high street derives much of its value from the location, not the landlord
- • A restaurant in a tourist hotspot has location-based trade that will continue regardless of who operates it
- • HMRC will argue this location goodwill is inherent in the property price
Personal vs location goodwill
Where goodwill is genuinely personal — a chef-patron's Michelin-starred reputation, a landlord's loyal local following — it may legitimately be allocated outside the SDLT charge, because it will not automatically transfer with the property. However, the documentation must clearly demonstrate that the goodwill will not survive the change of ownership.
Practical tip: Include a non-compete clause in the sale agreement where the seller retains personal goodwill. This demonstrates that the value genuinely attaches to the individual, not the premises, and is a key piece of evidence if HMRC opens an enquiry.
Chattels and Fixture Exclusions
The contents of a pub or restaurant — furniture, kitchen equipment, cellar equipment, glassware, crockery, cutlery, and decorative items — are likely to be chattels (personal property) rather than fixtures (part of the land). Chattels are excluded from SDLT.
Chattels — excluded from SDLT
- • Tables, chairs, and loose furniture
- • Loose kitchen appliances and equipment
- • Bar pumps and cellar equipment
- • Glassware, crockery, and cutlery
- • Stock (alcohol, food, consumables)
- • Free-standing refrigeration units
- • POS systems and IT equipment
Fixtures — included in SDLT
- • Built-in bar structure and counter
- • Fitted kitchen extraction canopy
- • Built-in cellar cooling systems
- • Fixed wall panelling and joinery
- • Plumbing for beer lines and gas
- • Permanent signage attached to building
- • Fire suppression systems
The distinction between a chattel and a fixture turns on the degree of annexation and the purpose of the annexation. A free-standing commercial oven is clearly a chattel. A bespoke kitchen extraction system built into the fabric of the building is clearly a fixture.
Worked Examples
Example 1: £500,000 freehold pub (property only)
0% on first £150,000 = £0
2% on next £100,000 (£150k to £250k) = £2,000
5% on remaining £250,000 (£250k to £500k) = £12,500
Total SDLT: £14,500
Example 2: Going concern pub — £700,000 total, apportioned
Property: £480,000 | Goodwill: £150,000 | Chattels & stock: £70,000
SDLT on property element only (£480,000):
0% on £150,000 = £0
2% on £100,000 = £2,000
5% on £230,000 = £11,500
Total SDLT: £13,500 (vs £22,500 on full price)
Saving of £9,000 through going concern apportionment.
Example 3: £1,200,000 restaurant with living quarters above
Mixed-use: non-residential rates on full price
0% on £150,000 = £0
2% on £100,000 = £2,000
5% on £950,000 = £47,500
Total SDLT: £49,500
Living quarters trigger mixed-use but non-residential rates apply to full price — no surcharge.
Leasehold Pubs and Restaurants
Many pub and restaurant operators hold their premises on a lease from a pub company, property company, or private landlord. The structure of the lease determines the SDLT position.
Lease SDLT: NPV of rent
Where rent is paid under the lease, SDLT is assessed on the NPV (net present value) of all rent over the lease term at the following rates:
| NPV of Rent | SDLT Rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £5,000,000 | 1% |
| Above £5,000,000 | 2% |
Where a lease is assigned (sold by the outgoing tenant to the incoming tenant), the incoming tenant pays SDLT on any premium paid for the lease. The rent continues under the existing lease terms; no new lease SDLT applies on assignment unless new terms are agreed.
Licence transfers and gaming licences
The transfer of a premises licence (alcohol, late night refreshment) is a regulatory process separate from the property transaction. Licence values attributed in the purchase apportionment may attract SDLT scrutiny — HMRC may seek to include licence premiums in the chargeable consideration if they relate to the use of the property rather than a transferable personal right.
Common Questions
How much stamp duty on a pub?
Pubs pay non-residential SDLT: 0% on the first £150,000, 2% on £150,001–£250,000, and 5% above £250,000. However, if bought as a going concern, only the property element is subject to SDLT — goodwill, stock, and chattels can be excluded, potentially reducing the bill significantly.
What is a going concern transfer for stamp duty purposes?
A going concern transfer is where a business is sold as a trading entity, not just as property. The total price is apportioned between property (subject to SDLT), goodwill (usually exempt), stock (exempt), and chattels/fixtures (exempt if movable).
Can I allocate purchase price to goodwill to reduce stamp duty?
Yes, but HMRC scrutinizes goodwill allocations carefully. The allocation must reflect genuine market value. Following HMRC v Denning, location-based goodwill tied to the property may be included in SDLT. Excessive goodwill allocation is a common HMRC investigation trigger.
Does the 5% surcharge apply to buying a pub?
No. The additional property surcharge applies only to residential purchases. Pubs and restaurants are non-residential, so no surcharge applies regardless of how many properties you already own.
See also: hotel & B&B stamp duty, shop & retail SDLT, or browse all property type guides.
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Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.